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Bull of the Day: AMN Healthcare (AHS)

AMN Healthcare Services, Inc. ( AHS ) just went on sale. This Zacks Rank #1 (Strong Buy) medical staffing company has seen its shares sell off in September but it's still expected to post double digit earnings growth.

AMN Healthcare provides workforce solutions and staffing services to healthcare facilities across the United States, including acute-care hospitals, urgent care centers and clinics. It places nurses and doctors and provides consulting services and recruitment outsourcing. There are two issues driving demand for staff in the healthcare industry right now: baby boomer physicians and nurses who are now retiring and millions of more people with insurance coverage under the new healthcare law. AMN Healthcare is taking advantage of both trends. Acquisitions Continue AMN Healthcare has been growing quickly through both acquisitions and also through organic growth. On Sep 15, it announced it had acquired The First String Healthcare, a staffing provider of nurses and executives. It serviced over 250 of the nation's hospitals. Nursing staffing has been on of its more successful areas and this acquisition will widen its scope. Revenue Soared in the Second Quarter On Aug 4, AMN Healthcare reported second quarter results and once again beat the Zacks Consensus. Earnings were $0.38 compared to the Zacks Consensus of just $0.30. It has surprised the last four quarters by an average of 24%. It has been on an earnings surprise hot streak. The company hasn't posted a miss since early 2012.

While the company has been gobbling up staffing companies, it's been growing just as quickly organically. Net revenue was up 40% year over year with organic revenue jumping 24%. Nurses and Allied Healthcare Staffing was up 45%, or 27% excluding acquisitions. Physician Permanent Placement jumped 19%. Locum Tenens Staffing saw revenue grow 31%, or 19% excluding acquisitions. Gross margin rose 60 basis points to 31.4%. Shares Sold Off in the Correction After being on a run for several years, shares finally pulled back in this stock market correction. Over the last month, shares have abruptly fallen 12%. That's the largest pullback in the last year.
While still not cheap, the shares suddenly have a more attractive valuation with a forward P/E of 21. Investors are paying for strong growth. Earnings are expected to rise 83.8% in 2015 and another 11.3% in 2016. For investors looking to invest in the healthcare industry, and who also want to cash in on the hot job market, AMN Healthcare Services is one to keep on the short list. Want More of Our Best Recommendations? Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential . Learn More>>Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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